Date post: | 19-Oct-2014 |
Category: |
Business |
View: | 947 times |
Download: | 9 times |
Key themes in Asia/ Emerging MarketsProjit Chatterjee, CFAEquity Strategist, EM and Asian EquitiesUBS Global AM
April 2013
UBS Emerging Markets High Dividend FundUBS Asian Consumption Fund
For professional clients only
NL Version
1
Disclaimer
For marketing and information purposes by UBS. UBS funds under Luxembourg law. UBS (Lux) Equity Fund – Asian Consumption (USD) P-acc, UBS (Lux) Equity SICAV - Emerging Markets High Dividend (USD) P-acc, UBS (Lux) Equity SICAV - Asia High Dividend (USD) P-acc, s an investment institution (beleggingsinstelling) within the meaning of the FSMA and registered in the Dutch register held with the Dutch Authority for the Financial Markets (Stichting Autoriteit Financiële Markten). Representative in the Netherlands for UBS funds established under foreign law: UBS Global Asset Management, UBS Investment Bank Nederland B.V. Rembrandt Tower – 18e verdieping, Amstelplein 1, 1096 HA AMSTERDAM, The Netherlands. Prospectuses, simplified prospectuses or Key investor information, the articles of association or the management regulations as well as annualand semi-annual reports of UBS funds are available free of charge from UBS Investment Bank Nederland BV or on the internet at www.ubs.com/fondsen. Before investing in a product please read the latest prospectus carefully and thoroughly. Units of UBS funds mentioned herein may not be offered, sold or delivered in the United States. The information mentioned herein is not intended to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Past performance is not a reliable indicator of future results. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units. Commissions and costs have a negative impact on performance. If the currency of a financial product or financial service is different from your reference currency, the return can increase or decrease as a result of currency fluctuations. This information pays no regard to the specific or future investment objectives, financial or tax situation or particular needs of any specific recipient. The details and opinions contained in this document are provided byUBS without any guarantee or warranty and are for the recipient's personal use and information purposes only. This document contains statements that constitute “forward-looking statements”, including, but not limited to, statements relating to our future business development. While these forward-looking statements represent our judgments and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors could cause actual developments and results to differ materially from our expectations. Source for all data and charts (if not indicated otherwise): UBS Global Asset Management
© UBS 2013. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved.
2
GEN0190n.ppt
Table of Contents
SECTION 1 EM/ Asia Outlook: Key Points 3
SECTION 2 Team and Capabilities 14
SECTION 3 EM/ Asia High Dividend 17
SECTION 4 Asian Consumption Fund 30
APPENDIX A Bios and disclaimers 42
SECTION 1
EM/ Asia Outlook: Key Points
4
EM and DM performance have decoupled recently
EM underperforming DM (US and Japan) since beginning of 2013
Source: UBS Global AM, Factset as of April 2013
5
Economic data out of DM surprising more positively than EM
80.0
90.0
100.0
110.0
120.0
130.0
140.0
150.0
160.0
Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13
EM growth surprise index DM growth surprise index
UBS Growth Surprise Indices
Source: UBS IB research, Bloomberg as of March 2013
The global surprise index is calculated as a GDP-weighted average of country-specific (27 countries) data surprise indices from a host of developed and major developing economies. These are in turn calculated using data on outturns and consensus forecasts from Bloomberg.
6
Economic indicators in Asia are turning up moderatelyIndustrial production shows gradual recovery
Source: Morgan Stanley research as of Apr 2013. Data as of end Feb 13
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13
China, YoY % China, YoY % 3MMA AXJ ex China, YoY % AXJ ex China, YoY % 3MMA
7
Emerging Markets do not face major sovereign debt issues
* Average using GDP-PPP Weights. IMF Forecasts, World Economic Outlook, as of June 2012Source: Morgan Stanley Research
Sovereign Debt to GDP*
0
20
40
60
80
100
120
50 55 60 65 70 75 80 85 90 95 00 05 10 15
% O
F G
DP
G7 ADVANCED ECONOMIES EMERGING ECONOMIES
888
Urbanisation will continue to be a key driver of growth
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
China India Russia Brazil Japan US Indonesia Korea Germany
Source: UN Population Statistics, GS Global ECS Research as of March 2012
Urbanisation ratio (%)
Japan (pre
1950)Korea(1976)
China(2010)
50%
India(2047E)
Urbanisation creates greater economic activity
9
-15% -10% -5% 0% 5% 10% 15% 20% 25%
Singapore
Taiwan
Malaysia
Hong Kong
China
Philippines
Korea
Russia
Thailand
Hungary
Mexico
Indonesia
Czech R.
South Africa
Peru
Chile
Brazil
Colombia
India
Poland
Turkey
Current account as % of GDP Government balance as % of GDP3-year % chg in loans (real)
-40% -20% 0% 20% 40% 60% 80% 100% 120%
Hungary
South Africa
Czech R.
Korea
Taiwan
Poland
Mexico
Chile
Thailand
Malaysia
India
Russia
Singapore
Philippines
Brazil
Peru
Colombia
China
Hong Kong
Indonesia
Turkey
9
Private sector debt has risen quickly in many EM/Asia markets
Source: UBS IB, IMF; as of 30 September 2012
Twin deficits in Turkey, India, Brazil
10
Build up of Credit in Asia
70.0
75.0
80.0
85.0
90.0
95.0
100.0
105.0
110.0
Dec
-90
Dec
-91
Dec
-92
Dec
-93
Dec
-94
Dec
-95
Dec
-96
Dec
-97
Dec
-98
Dec
-99
Dec
-00
Dec
-01
Dec
-02
Dec
-03
Dec
-04
Dec
-05
Dec
-06
Dec
-07
Dec
-08
Dec
-09
Dec
-10
Dec
-11
Dec
-12
Asia ex Japan Asia ex Japan and China
leverage
Global Financial Crisis
Asian Financial Crisis
Bank Credit to GDP ratio is now higher than 1997 peak
Source: CEIC ,HSBC as of Apr 2013. Data up to Dec 2012
11
Emerging Market trading below historic average and below DMP/E and P/B up to March 2013
Source: Factset, I/B/E/S, UBS Global AM as of end March 2013
0
5
10
15
20
25
30
Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12
EM (Emerging Markets) 12M trailing PE Average
+1SD (EM) -1SD (EM)
MSCI World 12M trailing PE
0
1
1
2
2
3
3
4
Sep-03 Sep-04 Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12EM (Emerging Markets) 12M trailing PB Average
+1SD (EM) -1SD (EM)
MSCI World 12M trailing PB
Global credit crisis
Global credit crisis
12
Emerging Market Equities: OutlookDespite lower levels of global growth, most major EM economies remain on course to sustain their long term structural growth path
Structural growth potential driven by demographics, urbanisation, productivity and consumption growth
Sound balance sheets– On average low debt levels at government.
corporate and household sectors
Both DM and EM macro policies are still supportive:– Loose monetary policy in DM
Economic growth appears to be bottoming out in some key EM countries
Contagion risks from sovereign debt issues in Europe and US– Economies which require global capital markets to
fund current account and fiscal deficits affected
Rising regulatory intervention– Price controls and resource taxes in emerging
markets
Increase in bank credit/GDP in Asia, back to pre-Asian crisis level
Escalating tensions in the Korean peninsula
Opportunities Risks
As of January 2013
13
China & India: rise or return?
Source: Angus Maddison, The World Economic: Historical Statistics, OECD, March 2010
Share of world GDP
Two thousand years of economic history
0%
5%
10%
15%
20%
25%
30%
35%
40%
1
1000
1500
1600
1700
1820
1870
1913
1950
1973
2001
China India Europe US
SECTION 2
Team and Capabilities
15
Emerging Markets Equities Team
Source: UBS Global Asset ManagementAs at 28 February 20131 Member of Emerging Markets Equity Strategy Committee
Portfolio construction and research
A stable and experienced team managing ca. USD 26 bn
Geoffrey Wong1
Head Global Emerging Markets & Asia Pacific Equities
Hong Kong / Singapore
Manish Modi1Portfolio ManagerAsia ex Japan
Cheah Yit Mee1
Portfolio ManagerAsia ex Japan
Bin ShiPortfolio ManagerChina
Projit Chatterjee1
Equity Strategist
Namit NayegandhiAnalyst
Chan Chee SengAnalyst
Yu ZhangAnalyst
Sanjeev JoshiAnalyst
Joanna MakAnalyst
Leslie ChowAnalyst
Matthew AdamsAnalyst
Hai HuangAnalyst
Kelvin TeoAnalyst
Han Yaw JuanTrader
Jimmy ChuaHead Trader
Paul HillmanTrader
Reginald OhTrader
Dorothy LekTrader
Gabriel Csendes1
Portfolio ManagerAnalyst
Michael AbelleraTrader Latin America
Zurich / London / Chicago
Urs Antonioli1Head of EM EMEA/Latin America Equities
Mark RoggensingerAnalyst
Gabriella AbderhaldenAnalyst
Irina BudnikovaAnalyst
Benita MikolajewiczAnalyst
Steve HerbertTrader EMEA
Macrina OtienoTrader EMEA
Justin WellsEquity Strategist
Choo Shou PinAnalyst
Grace TayEquity Strategist
16
Core/Value Asia & EM Strategies
BRIC EM Infrastructure Global EM GEM Value Focus
(HALO) EM High Dividend EM Synergy
Asia: China China A Greater China China Opportunity Hong Kong India Singapore TaiwanEx-Asia: Russia Brazil
CountryRegionalGlobal
Asia: Asia ex Japan Asia Opportunity Far East ex Japan Emerging Asia Asia Pacific ex Japan AC Pacific ex Japan Pacific ex Japan Asian Consumption Asia High Dividend Asia Small and Mid Caps Asia 130/30Ex-Asia: Central Europe Eastern Europe Latin America EM ex-Asia
Note: As of 28 Feb 2013
Managing ca. USD 26 bn in various strategies
SECTION 3
EM/ Asia High Dividend
18
EM equities provide stable dividend payments
For the MSCI EM equity index, DPS (dividend per share) has steadily increased over the last 10 years
Dividends have been more stable than earnings in downturns
EM and Asia are the regions with the fastest growth rates of DPS
EM have managed DPS compound annual growth rate of 13% since 2000
MSCI EM, DPS and EPS EM and Asian Dividends have grown fastest
Source: Factset, CLSA Asia-Pacific Markets, as per 31 December 2012Source: UBS IB, MSCI, as per 31 December 2012
-
100
200
300
400
500
2002 2004 2006 2008 2010 2012
DPS EPS
0
100
200
300
400
500
2000 2002 2004 2006 2008 2010 2012
AxJ Europe EM DM USA Japan
Number of high yielding stocks in EM has increased significantly
19
0%
20%
40%
60%
80%
100%
120%
1992 1995 1998 2001 2004 2007 2010 2013e
Asia ex Japan MSCI World MSCI EM
0%
10%
20%
30%
40%
50%
60%
70%
80%
2002 2004 2006 2008 2010 2012
Payout DM Payout EM
EM equities offer the potential to raise dividend payments
EM companies consistently reduced their debt levels during the past decade
Current net debt to equity ratios ~ 28%, lower than developed markets with a ratio of ~40%
EM companies have high cash levels on their balance sheets
Potential to further increase dividend pay out ratios– Current pay out ratios are at the lower end of historical range and below DM levels
– many companies enter mature growth phase
Source: UBS IB, as per 31 December 2012
Net debt to equity by region EM and DM pay out ratios
Source: UBS IB, MSCI, as per 31 December 2012
20
Dividends represent an important component of total return
Dividends compound over the long run to make a substantial contribution to total return
The contribution from dividends becomes more important in periods of normal or muted equity market returns
Source: UBS, December 2012 – cumulative returns excl. transaction costs, commissions, fees, margin interest. Actual transactions adjusted for such costs will result in reduced total returns
Dividend (re-investment) gain vs Capital gain
Reinvested dividends account for 40% total returns of MSCI EM since 2000
MSCI EM – Total vs Price returns (CAGR)
Source: Datastream, UBS, December 2012
(50%)
0%
50%
100%
150%
200%
250%
300%
350%
400%
5 year 10 year
Capital Gain Dividend and dividend reinvestment gain
0
500
1000
1500
2000
2500
87 92 97 02 07 12
Price index Total return index
21
Back-test of a High Dividend EM Equity portfolio over 10 years
10 years (31 December 2002 – 31 December 2012) EM MSCI universe
EM high dividend portfolio
Annualised return 17.0% 24.8%
Annualised standard deviation 24% 23%
Source: UBS Investment Bank Worldscope, DatastreamNote: The above chart shows returns by calendar year to 31 December 2012. All other information is as at 31 December 2012. 1 Back test rules: At each month end, the universe is restricted to stocks which are in the MSCI EM Index on that date. Each stock has a market capitalisation of at least USD 1 billion on thatdate. 75 stocks with the highest trailing dividend yield over the previous 12 months on that date are selected. These stocks are equally weighted within the portfolio. The portfolio is rebalanced at month end and the total returns computed in USD.Note: Back-test results or past performance are not guides for the future. No restriction to buy/sell stocks i.e. no constraint on having to actually receive dividends and payout the same as income. Our portfolio will be selected from ca. 350-400 stocks under our research coverage.
Portfolio selected from the entire universe of stocks in the MSCI EM index
-60%
-40%
-20%
0%
20%
40%
60%
80%
100%
120%
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Ret
urn
by
year
EM MSCI universe High yield stocks
High dividend EM Equities have performed very well
22
GEN0190n.ppt
Final portfolio construction
by PMs
Investment and portfolio construction process
Investment Universe
300-400 stocks for EM
Selected top dividend yield stocks
60-100 stocks
Qualitative overlay by analysts
Selection of high dividend stocks, remove overvalued stocks
Remove stocks where dividends are not sustainable or have weak fundamentals
Add stocks where dividends are stable and/or likely to increase
Client portfolio
Typically 40-70 stocks
UBS Emerging Markets High Dividend Equities
23
Country allocation
Emerging Markets High Dividend Fund: Portfolio Positioning
For illustrative purposes only. The fund is actively managed hence the above portfolio composition is indicative only and can be changed at any time at UBS' absolute discretion.Source: UBS Global Asset Management, Factset, GEVS,,Worldscope
* Indicative current dividend yield: This figure is indicative only and gross of fund fees. The indicative current dividend yield is based on the dividends of last year paid by the companies held in the fund. Withholding taxes paid by the fund are already deducted from this figure. The final dividend yield can deviate significantly from the indicative current dividend yield due to changes in company earnings, dividends and stock prices etc. In accumulating share classes, the dividend yield, net of fund fees, will be accumulated. In distributing share classes, the dividend yield, net of fund fees, will be distributed.
Indicative current div. yield: 5.4%* (gross of withholding taxes) 4.9%* (net of withholding taxes)
In comparison, MSCI Emerging Markets index currently has a gross dividend yield of 2.8%
Diversification across countries and sectors per 31 March 2013
Sector allocation
Turkey 3.3
Thailand 6.7
Taiwan 14.8
Singapore 8.3Russia 10.4 Poland 6.6
Philippines 1.8
Peru 1.7
Mexico 1.8
Malaysia 3.2
Korea 3.4
Israel 1.7
Indonesia 1.7
Hong Kong 3.3
Czech Republic 3.8
China 6.5
Chile 1.7
Brazil 6.9
SouthAfrica 12.4
Cons. Discretionary0.8
Industrials1.7
Utilities3.4
Materials10.1
Energy11.7
IT14.6 Telecoms
22.7
Financials31.5
Cons. Staples3.5
24
Performance in % (basis USD, net of fees)in % 2009 2010 2011 2012 2013 March since p.a.
YTD 2013 31.05.11
Fund (USD) – – – 17.50 -1.80 -0.55 0.60 0.33
Benchmark 2 – – – 18.23 -1.62 -1.72 -7.38 -4.10
Added Value – – -0.73 -0.18 1.17 7.98 4.42
1) YTD: year-to-date (since beginning of the year)
2) Benchmark in currency of account (without costs)
1
PerformanceUBS (Lux) Equity SICAV – Emerging Markets High Dividend (USD) P-acc
Data as at end of March 2013These figures refer to the past. Past performance is not a reliable indicator of future results. The performance shown does not take account of any 0commissions and costs charged when subscribing to and redeeming units.
Performance indexed in % (Basis USD, net of fees)
75
80
85
90
95
100
105
06.11 12.11 05.12 10.12 03.13UBS (Lux) Equity SICAV - Emerging Markets High Dividend (USD) P-acc
MSCI Emerging Market (net divi. reinv.)
25
GEN0190n.ppt
Emerging Markets High Dividend Fund: Composite PerformancePeriods up to 31 March 2013
Source UBS Global Asset Management
26
Asia High Dividend Fund: Portfolio PositioningDiversification across countries and sectors per 31 March 2013
Country allocation Sector allocation
For illustrative purposes only. The fund is actively managed hence the above portfolio composition is indicative only and can be changed at any time at UBS' absolute discretion.Source: UBS Global Asset Management, Factset, GEVS,,Worldscope
Indicative current div. yield: 4.3%* (gross of withholding taxes) 3.8%* (net of withholding taxes)
In comparison, MSCI Asia ex Japan index currently has a gross dividend yield of 2.4%
* Indicative current dividend yield: This figure is indicative only and gross of fund fees. The indicative current dividend yield is based on the dividends of last year paid by the companies held in the fund. Withholding taxes paid by the fund are already deducted from this figure. The final dividend yield can deviate significantly from the indicative current dividend yield due to changes in company earnings, dividends and stock prices etc. In accumulating share classes, the dividend yield, net of fund fees, will be accumulated. In distributing share classes, the dividend yield, net of fund fees, will be distributed.
Philippines2.6
Malaysia5.1
Indonesia5.2
Korea9.9
Thailand12.6
China14.8
Singapore19.8
Taiwan22.7
Hong Kong7.3
Industrials2.4
Utilities2.4Materials
2.5
Cons. Staples5.0
Energy12.4
IT22.7
Financials29.9
Telecoms22.6
27
Performance in % (basis USD, net of fees)in % 2009 2010 2011 2012 2013 March since p.a.
YTD 2013 01.06.11
Fund (USD) – – – 19.25 2.20 -0.20 2.20 1.18
Benchmark 2 – – – 22.26 -0.39 -1.98 -3.10 -1.71
Added Value – – – -3.01 2.59 1.79 5.30 2.89
1) YTD: year-to-date (since beginning of the year)2) Benchmark in currency of account (without costs)
1
PerformanceUBS (Lux) Equity SICAV – Asia High Dividend (USD) P-acc
Data as at end of March 2013These figures refer to the past. Past performance is not a reliable indicator of future results. The performance shown does not take account of any commissions and costs charged when subscribing to and redeeming units.
Performance indexed in % (Basis USD, net of fees)
75
80
85
90
95
100
105
06.11 11.11 04.12 10.12 03.13UBS (Lux) Equity SICAV - Asia High Dividend (USD) P-acc
MSCI All Country Asia ex Japan (net divi. reinv.)
28
GEN0190n.ppt
Asia High Dividend Fund: Composite performancePeriods up to 31 March 2013
Source UBS Global Asset Management
29
Why high dividend stocks in Emerging Markets/Asia ?
Stable dividend payout: EM/Asian companies have typically paid shareholders between 30-40% of their earnings over the past 10 years1
Ability to pay sustainable dividends
– EM/Asian companies show low debt levels on their balance sheets and have the cash to fund sustainable dividend payments
– Their current payout ratio is <35%1 which is at the lower end of its historic band, and below DM cos. payout ratio, suggesting room to increase
Dividend strategies have performed very well
– A simple illustrative portfolio2 that picked the EM/Asia stocks with the highest dividend yields, performed significantly better than the market1 over the last 10 years
– The UBS EM/Asia high dividend strategies have performed very well since inception in 2011
Diversification: EM/Asia High Dividend funds should provide good diversification to both your yield/income and Emerging markets exposures
Benefits of high and stable yield, with the potential for long-term capital appreciation
1 Source: UBS Investment Research, data based on respective MSCI indices as of 31 Mar20112 Based on back test portfolio of highest dividend yielding stocks, rebalanced monthly, from March 2001 to March 2011, conducted by UBS Investment Bank
SECTION 4
Asian Consumption Fund
31
Growing consumption in AsiaStrong secular drivers behind Asian consumption growth
Source: CLSA Research as of Feb 2013, except for the point on Indonesia - data as of 2011.
Asia Consumption Potential
Did you know?
Nearly one in three billionaires in the world is now in Asia, up from one in ten in 2005
Over 65% of all global luxury sales is now to emerging market customers
Greater China consumers will account for 50% of global luxury sales by 2020
In Indonesia, 11% of households in Indonesia have personal computers
Young population
Increasing income and wealth
Urbanisation More consumption
Low penetration of consumer goods
Favourable government policies
32
0
5
10
15
20
25
India China US Indonesia Japan Russia GermanyMexico
2020 F 2030 F
% of global share of middle class consumption
0%5%10%15%20%25%30%35%40%45%50%
Asia US France UK Spain Germany Japan
Youngest and largest consumer base in the worldAsia will have 1 billion middle class consumers by 2015
% of population aged 25 years and less (2011)
Source: United Nations Population Division, UBS IB research and estimates as of Jun 2012
Source: Brookings Institition, Deutsche Bank as of March 2013. Assumption: People spending USD 10 to USD 100 a day (2005 PPP$) fall in the middle class category
33
0
50
100
150
200
250
300
350
400
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
E
2013
E
2014
E
2015
E
2016
E
2017
E
2018
E
2019
E
2020
E
China India Russia Brazil Japan US Indonesia
No.
of H
ouse
hold
s in
Mill
ions
The EM Consumer is set to become a dominant force
Source: Euromonitor, Morgan Stanley Research, as of Nov 2012
Number of Households with Disposable Income above US$10,000
34
Low penetration of consumer goods in Asia
Source: Ashwin Chotai, CEIC, CLSA Asia-Pacific Markets research as of Jun 2012Latest available data: Apr 2011
Light vehicle ownership vs GDP per capita PC penetration (PCs per 1,000 population)
0
300
600
900
1,200
US WesternEurope
Japan Worldwide AsiaPacific
Source: Gartner Data, Goldman Sachs Research as of Jun 2012Latest available data: Mar 2011
35
Economic rebalancing boost domestic consumption by middle, low-income households
India National Rural Employment Guarantee Scheme
Higher minimum support prices for key agri-produce have helped drive rural incomes
China Nationwide increase in minimum wage
Social housing to provide affordable housing
Thailand New rice pricing scheme - guarantee paddy rice prices
(50% higher than current price)
Nationwide increase in daily minimum wages by 40%
Government policies stimulate mass market consumption
…
Source: UBS Global Asset Management
36
Investment and portfolio construction process
Note: Valuation primarily based on the Price/Intrinsic Value PhilosophyInvestment universe of investible stocks (i.e. at least USD 500 mn market capitalisation)
Screen: Valuation based metrics (e.g. P/E, P/B)
~100 - 150 stocks
Investment Universe ~400-500 stocks
Portfolio Construction
ACF portfolio
Typically 30-60 stocks
UBS Asian Consumption Equities
Fundamental research
1. Industry outlook
2. Company model
3. Valuation
Risk system
37
UBS Asian Consumption FundPlaying the strong Asian consumption theme
Includes:
Tobacco:
Beverages:
Consumables:
Food:
Includes
Retail:
Cosmetics: LG H&H, Amorepacific
Autos:
Media:
Gaming and hotels:
Includes
Medical services:
Hospitals:
Pharmaceuticals:
Note: This information should not be considered as a recommendation to purchase or sell any security.
Consumerstaples
(basic consumption)
Consumerdiscretionary
(“good to have”with more wealth)
Healthcare
Company examples:
• KT&G, ITC
• Nestle India, Uni President,
Unilever
Want Want, Tingyi
Companies
Golden Eagle, Belle
LG H&H, Amorepacific
Hyundai, Dongfeng
Media: Zee TV, BEC World
Sands, Bloomberry.
Companies
Mindray Medical International
Apollo hospital, Bumrungrad
Sun Pharma, Lupin,
38
Top 10 stock overweights
This information should not be considered as a recommendation to purchase or sell any securitySource: UBS Global Asset Management. Figures refer to UBS (Lux) Equity Fund – Asian Consumption
As of end March 2013
Active (%)Benchmark (%)Fund (%)Company
2.75
0.37
3.61
1.14
1.72
1.58
1.66
2.75
1.69
4.14
-0.02
2.42
-0.43
2.35
1.78
1.99
2.07
1.02
2.19
0.68
2.74
2.79
3.19
3.48
3.50
3.58
3.73
3.77
3.89
4.82
Itc Limited
Godrej Consumer Products
Astra International
Lg House & Healthcare
Uni-President Enterprises
Hengan
Kt&G Corporation
Sands China Ltd
Belle International Holdings
Hyundai Mobis
39
GEN0190n.ppt
Strong performance since inception
Asian Consumption: Performance up to Mar 13
Source: UBS Global Asset Management, Factset. Strategy was incepted in 29 February 2008Past performance is not indicative of future results.* There was no representative benchmark up to 31 March 2010. Since 1 April 2010, the MSCI Asia ex Japan Consumer and Health Care Sectors Index (i.e. comprising of the consumer staples, consumer discretionary and healthcare sectors of MSCI Asia ex Japan) has been used as the benchmark. Returns are gross of fees. The Asian Consumption Strategy was launched in February 2008 with the UBS (Lux) Institutional Sicav – Asian Consumption (USD)/(SGD) RA. This institutional vehicle was subsequently terminated after it was moved into the retail vehicle – the UBS (Lux) Equity Fund - Asian Consumption (USD) P-acc (valor 1041161) in Jul 2009.** From inception 29 February 2008 to Dec 2008
Calendar year returns
Since Inception Cumulative returns
65.2
8.4
45.6
0
10
20
30
40
50
60
70
Mar '08 - Mar '13
(%)
-38.3
93.2
22.2
-6.6
22.2
-1.0
(47.8)
72.1
19.6
(17.3)
22.4
(0.5)
-44.5
88.6
29.2
-6.1
15.4
0.1
-60
-40
-20
0
20
40
60
80
100
120
2008** 2009 2010 2011 2012 YTD 2013
(%)
UBS Asian Consumption CompositeMSCI Asia ex JapanBenchmark *
40
GEN0190n.ppt
39.7%3.7%
2.5%
1.3%3.4%
47.4%
34.2%
7.0%58.8%
0% 10% 20% 30% 40% 50% 60% 70%
Consumer Staples
FinancialsInformation Technology
Industrials
Health CareConsumer Discretionary
UBS Asian Consumption (%) Benchmark (%)
Asian Consumption: PositioningPositioning as of end March 2013
* There was no representative benchmark up to 31 March 2010. Since 1 April 2010, the MSCI Asia ex Japan Consumer and Health Care Sectors Index (i.e. comprising of the consumer staples, consumer discretionary and healthcare sectors of MSCI Asia ex Japan) has been used as the benchmark. Source: UBS Global Asset Management
Sector allocation
Country allocation
19.1%
11.6%
18.2%
8.7%
20.1%
3.7%
3.8%
4.3%
6.4%
1.7%
2.4%
17.0%
10.1%
12.4%
7.9%
28.4%
6.9%
0.8%
6.3%
6.7%
3.5%
0.0%
0% 5% 10% 15% 20% 25% 30%
China
Hong Kong
India
Indonesia
Korea
Malaysia
Philippines
Singapore
Taiwan
Thailand
Cash
Fund BM
41
0.002.004.006.008.00
10.0012.0014.0016.0018.00
Jul/0
2
Jul/0
3
Jul/0
4
Jul/0
5
Jul/0
6
Jul/0
7
Jul/0
8
Jul/0
9
Jul/1
0
Jul/1
1
Jul/1
2
ASIA EX JP Cons Desc Mean 1SD Upper 1SD Low er
0.002.004.006.008.00
10.0012.0014.0016.0018.0020.00
Jul/0
2
Jul/0
3
Jul/0
4
Jul/0
5
Jul/0
6
Jul/0
7
Jul/0
8
Jul/0
9
Jul/1
0
Jul/1
1
Jul/1
2
AsiaEx - CD-CS-HC All Mean 1SD Upper 1SD Low er
AxJ consumer sector valuations below its historical averages
Consumer Discretionary Consumer Staples
PE Fwd to March 2013
Data on the forward P/E of the Asia ex Japan consumer staples, consumer discretionary and healthcare sectors. SD refers to standard deviation (based on 5Y data) Source: J.P.Morgan Quant Strategy
0.00
5.00
10.00
15.00
20.00
25.00
Jul/0
2
Jul/0
3
Jul/0
4
Jul/0
5
Jul/0
6
Jul/0
7
Jul/0
8
Jul/0
9
Jul/1
0
Jul/1
1
Jul/1
2
ASIA EX JP Cons Stap Mean 1SD Upper 1SD Low er
APPENDIX A
Bios and disclaimers
43
Projit Chatterjee, CFA Equity Strategist, Global Emerging Markets and Asia Pacific Equities, Managing Director
Projit Chatterjee is an Equity Strategist within the Global Emerging Markets and Asia Pacific Equities team. He is a member of the Global Emerging Markets Strategy Committee and is based in the Singapore office. He is also co-manager of the GEM and Asia High Dividend funds.
Projit has primary responsibility for overall product positioning and development of Emerging Markets and Asian Equity strategies, as well as marketing and communication of these strategies to existing and prospective clients globally.
Prior to this, Projit led an acquisition project in the Indian market.
Projit joined UBS in 1997 as a Corporate Finance Analyst with UBS Investment Bank in Mumbai, India. In 1999, he moved to UBS Global Asset Management in Zurich to work in Strategic Projects, International Fund Marketing. In Zurich, Projit held various roles in the areas of strategic business development, business management and investment solutions.
Before joining UBS, Projit worked briefly as a money market and foreign exchange dealer in the treasury of MashreqBank, a UAE bank in Mumbai.
Years of investment industry experience: 16
Education: Indian Institute of Technology (India), B.Tech; Indian Institute of Management (India), MBA
44
Emerging Markets High Dividend DisclosureSchedule of composite performance
45
Asia High Dividend Composite DisclosureSchedule of composite performance
46
Asian Consumption Composite DisclosureSchedule of composite performance
The composite's past performance is not necessarily an indication of how it will perform in the future.